Infratil gets boost from Aussie arm

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Infratil's Australian electricity business is expected to surpass half a million customers in the coming months, with growth poised to accelerate further next year.

The Wellington-headquartered infrastructure investor reported a $17 million loss for the six months to September 30, down from a $50m surplus a year ago, hit by major impairments at its troubled British airports.

Excluding the impairments, Infratil's earnings were higher than the same time a year ago, driven almost entirely by growth in Australia, where its energy business saw a 54 per cent jump in earnings to $71.2m.

Lumo, Infratil's Australian retail electricity brand, had built a customer base of 470,000 by the end of September, and was forecast to hit 500,000 by the end of March.

Already more than double the customer base of Tauranga-based TrustPower, which is majority-owned by Infratil, Lumo could surpass state-owned Genesis Energy's 550,000 New Zealand electricity customers next year.

Chief financial officer Kevin Baker said a new sales channel driven through real estate agents, Direct Connect, was expected to add another 100,000 customers a year to its business from 2013.

While Lumo had higher-than-average customer turnover, the rate of growth could rise to up to 150,000 a year, Baker said.

Chief executive Marko Bogoievski said Lumo was still a minor player in the Australian market (Contact Energy's majority owner Origin has 4.4 million Australian customers) but there was nothing to stop the rapid growth continuing.

"There's nothing really to stop it getting to double the level it's at right now," Bogoievski said, adding that the business may become a takeover target before it reached that level.

"I think what's going to happen is you'll get one of the larger players thinking about consolidation ideas . . . So whether you get to complete the experience, I don't know."

While Lumo has only limited generation of its own - rarely used peaker plants designed to protect against spikes in wholesale prices - Australia is home to Infratil's largest-ever capital project, the $550m Snowtown II wind farm in South Australia, which TrustPower began building in September.

The project appears to reflect the contrasting fortunes of the New Zealand and Australian markets. While generators in New Zealand, TrustPower included, have been delaying major capital projects, Bogoievski said the company had every intention of developing the company's 1000-megawatt project pipeline.

Infratil has publicly questioned state- owned Meridian's decision to build the Mill Creek wind farm near Wellington, but boasts that Snowtown II would generate earnings of $99m a year.

With an agreement to sell all its output to Origin, Bogoievski said Snowtown could generate an unleveraged return of 13 per cent on a relatively low-risk project.

Most of Infratil's subsidiaries now report results ahead of the parent company, although yesterday's presentation revealed that NZ Bus saw its earnings fall by $2.2m to $21.8m.

Infratil also evaded questions about whether it was in the running to buy Stansted Airport, near London, despite being unable to sell its existing loss- making British airports in Kent and Ayrshire.

Asked if the company was on a short- list of bidders for Stansted, whose Spanish owners have been forced to sell it by competition authorities, Bogoievski responded curtly: "We wouldn't know, would we?" Fairfax NZ